The Day at a Glance | April 16 2020

The US will announce guidelines to resume activities

After most recent figures regarding new coronavirus cases in the US show a slowdown, the United States administration prepares to announce a list of guidelines that will allow a gradual return to normal activities in the economy. President Donald Trump plans to ease social distancing requirements and orders to stay at home after having conversations with employers that have asked him to reopen the economy soon. However, it`s unclear whether or not state governments and citizens are willing to comply with the President`s instructions. The strategy will require an ambitious COVID-19 testing program that will allow the government to have reliable information regarding pockets of infection and low-risk regions. Concerns remain on a possible new acceleration of the outbreak, which is why measures must be executed carefully and the banning of mass events and large gatherings of people must remain in effect, according to health experts. At the moment, data continues to show mitigation measures have a deep impact on the economy: Manufacturing production recorded its worst fall in 74 years in March and initial jobless claims increased in 5.2 million the week ending April 11. With this, more than 20 million Americans have been unemployed in the last 4 weeks, which practically eliminates the 24.8 million jobs created in the economy since 2010. US authorities have carried out a stimulus package of up to $6 trillion dollars ($2 trillion in a fiscal stimulus package; $4 trillion from the FED), which represents more than 25% of GDP.

The US asks Mexico to reconsider closing factories

According to recent reports, the National Association of Manufacturers in the US has requested Mexico`s government to reconsider closing factories as a mitigation measure to control the spread of COVID-19. The motion comes from the need to increase the production of personal protective equipment and medication in the US, which is why the manufacturing industry in Mexico is being asked to be considered essential, in order for it to continue operations. The US considers Mexican mitigation measures may affect its ability to respond to the pandemic. In Mexico, the COPARMEX has also requested the automotive industry to be considered an essential sector of the economy, as it considers the manufacturing and distribution of automobiles as a fundamental part of a return to normality regarding production chains in North America, Asia and Europe. Mexican President Andrés Manuel López Obrador had already suggested the industry could resume operations shortly, however, this has not yet been made formal in the Official Journal of the Federation by the General Health Council. One of every five employed people in the Mexican manufacturing sector depend on the automotive industry.

Contraction persists in the European industrial sector

Industrial production contracted in Europe (-) 1.9% annually in February (-0.1% monthly) and recorded 15 consecutive months of contraction. The greatest falls were recorded in the production of capital goods (-3.1% annual; machinery, equipment, etc.), followed by the energy sector (-1.7%) and intermediate goods (-0.2%). These figures record the lockdown`s first effects in the region and it`s expected the negative impact will continue to be observed in March and April. The industry has been strongly affected since last year due to the trade war and has not been able to recover this year due to the health emergency.